New Limitation Act — in force June 1, 2013

On June 1, 2013, the new Limitation Act, SBC 2012, c. 13 (formerly Bill 34) came into force. The new Act simplifies the time limits for filing civil lawsuits. It replaces the former two, six and 10-year limitation periods for civil claims with a two years- from-discovery basic limitation period and the former 30-year ultimate limitation period with a 15-years-from-occurrence limitation period (with some exceptions).

The new Act’s limitation periods will apply to claims arising from acts or omissions that occur and are discovered on or after June 1, 2013. Under the new Act, most claims are discovered when a claimant knew or ought to have known that the injury, loss or damage was caused by the defendant, and that a court proceeding would be an appropriate remedy (although discovery is postponed for some claims).

The old Act’s provisions continue to apply to pre-existing claims discovered before June 1, 2013. Transition rules in the new Act govern pre-existing claims arising from acts or omissions that occur before June 1, 2013 but are discovered on or after that date.

As with any legislative change, understanding the new law and how it applies to your area of practice is essential for avoiding mistakes. Education and information is available through various resources.

New Limitation Act — resources

The BC government has developed comprehensive resources designed both to explain the new Act and to help the legal community and the public transition to the new law. These resources, including a transitions rules flowchart for the new Act, are available here.

Training and resources are available through the Canadian Bar Association, BC Branch and Continuing Legal Education BC.

Given that provisions in the new Act have been and will continue to be considered by the Courts, you will want to review any relevant case law.

The New Limitation Act: 10 tips to beat the reset clock

One thousand, one hundred five. That’s the number of lawyers who reported claims and potential claims to the Lawyers Insurance Fund in the five year period before the new Limitation Act came into force because of a missed limitation or deadline. That’s on top of the 1,600 lawyers whose reports over seven years prompted the creation of our 2007 guide, Beat the clock – Timely Lessons from 1,600 Lawyers. It’s clear that limitations already create risk for lawyers, and the new Limitation Act has the potential to increase that risk.

This following will help you “beat the clock” now that the new Act is in force (as of June 1, 2013).

As with any legislative change, understanding the new law and how it applies to your area of practice is essential for avoiding mistakes. Education and information is available through various resources. The purpose of the following is to highlight some specific areas of risk beyond the key changes to the basic and ultimate limitation periods. You can continue to beat the reset clock by following the tips below as well as those detailed in our earlier guide. Of course, references to the new Act are not intended to replace your own careful review of the law.

With the two-years-from-discovery basic limitation period governing many civil claims, the luxury of time enjoyed by lawyers previously dealing with six and 10-year limitation periods is gone (except for six years in relation to government debts and 10 years to enforce judgments). You’ll need to think through limitation issues earlier, investigate earlier and file earlier.

Devote enough time and attention at the initial interview to ensure that you have all the information you need to determine when your client discovered – or reasonably ought to have discovered – the claim. If there is any doubt as to when discovery occurred, assume the limitation runs two years from the date that the damage occurred.

And as we’ve said before, sometimes the right decision is to “just do it” – simply go ahead and start an action even if it turns out you need not have sued when you did, or even at all. Remember this advice if your client wants to arbitrate or exercise some other non-judicial remedy. Filing a Notice of Civil Claim within the two-years-from discovery limitation period will keep your client’s judicial remedy safe from an “out of time” challenge in the event the other ultimately fails.

And a caution about transferred files. If you inherit a file, the limitation issues may not have been properly identified or managed by the previous lawyer. With the shorter limitation, it’s even more important to read through the transferred file as soon as you can. Do not let it languish on your desk.

It’s not just lawyers who have lost the luxury of time. For example, anyone who buys, sells, lends, borrows, develops or engages in any other way in any business, commercial or financial undertaking that may give rise to a claim faces the same time crunch. “Let’s wait and see” is no longer an option if the waiting period is any length of time. And the 15-years-from-occurrence ultimate limitation means that a claim is barred after 15 years, even if the act hasn’t been discovered or no damage has occurred (subject to the confirmation rules under the new Act). It may be appropriate to explain the need to anticipate, monitor and actively investigate potential problems that may lead to losses.

If you act for a sophisticated client with considerable legal knowledge, don’t simply assume that client is fully aware of the new Act and its implications. Check it out.

The new Act clarifies that once a claim is statute-barred, every remedy relating to that claim is statute barred, even if it is non-judicial. Non-judicial remedies are those that a person is entitled, by law or contract, to exercise without going to court; for example, distraining for rent or proceeding pursuant to a binding arbitration clause in an agreement. Whether your client’s remedy involves court proceedings or not, you will need to ensure that the limitation is properly recorded in the central firm diary system and that you follow the “act early” caution in tip #1, including starting any action your client may later want to pursue.

In terms of contractual remedies, you will want to identify any that may be available to your client by reviewing related contracts or agreements as soon as a problem arises. You will also want to follow the suggestions in tip #7 below in terms of the contracts you prepare.

You can read more about how to create an effective central firm diary system in tips #1 through #8 of Beat the clock.

If your firm uses an electronic program for your central diary system, you will need to ensure that adjustments are made to any automated processes that calculate limitation dates and reminders to reflect the shorter limitation periods.

The new Act specifies claims to which it does not apply. These include all of those exempted in the old Act, plus some new ones. For example, there are no longer limitations for civil claims for damages arising out of an assault or battery against a minor or for enforcing a judgment for child or spousal support arrears.

The new Act is now clearly a default statute. If another statute sets out a specific limitation period, the new Act will not apply except as provided in that other statute. (Keep in mind, some statutes incorporate the new Act’s postponement rules for minors or adults under a disability). If you are acting in relation to an insurance property or disability claim, for instance, you will be governed by the limitations in the Insurance Act, not the new Limitation Act. And remember that you may need to also think outside the “other statute” box, as that statute may require you to still look further for the limitation. For example, the Insurance Act does not apply to certain types of insurance, including vehicle insurance. That one year limitation period is found in the Insurance (Vehicle) Act.

Common limitations from other statutes that are less than two years are set out in the Limitations and Deadlines Quick Reference List.

As explained in tip #3, the right to pursue any remedy is extinguished once the limitation for the underlying claim has passed. If your client’s contract or agreement contains a non-judicial remedy for a breach or damage, remember that the remedy will not be available once the two-year limitation expires. These might include dispute resolution remedies such as arbitration or mediation. You will want to:

draft contracts with non-judicial remedies that will work in light of the tighter two-year limitation;

review and update the precedents and templates you use to incorporate any revisions required in light of the new Act;

appreciate that the new Act is just as silent as the old on the legal effect of “contracting out” of the Act. As there are no legislated restrictions, it seems likely that courts will continue to apply the existing law in relation to tolling agreements and those that purport to alter limitation periods.

If you act for a defendant, you will need to follow the advice set out in tip #1 in terms of thinking, investigating and acting earlier if there is a potential third-party claim for contribution or indemnity. Here’s why. The new civil rules already impose a 42-day deadline for filing a third-party notice without leave. Now, the basic and ultimate limitation periods also apply to claims for contribution or indemnity. The basic limitation may start running as soon as a defendant is served with a Notice of Civil Claim (the ultimate limitation always starts that day). You can no longer wait for the outcome at trial before starting a new action. Note that the substantive law relating to other third-party claims, as well as counterclaims, setoffs or claims for substituting parties, is unchanged.

Demand loans (no fixed conditions of repayment)

The basic and ultimate limitation clock is now set by the timing of the demand and default, not the date of the loan.

Medical malpractice claims

Negligence claims against doctors, hospitals and hospital employees are now also governed by the two-year basic and 15- year ultimate limitation periods. The old Act’s special six-year ultimate limitation was not carried forward.

There are detailed rules governing transition between the old Act and the new in circumstances where the act or omission occurs prior to June 1, 2013 but discovery occurs after that date. Different transition rules apply to claims that were previously governed by the special six-year medical ultimate limitation period (now gone). Check out the government website for a detailed explanation of which basic and ultimate limitation applies.

With the much shorter basic limitation period, it’s certainly possible that more will be missed. Unhappy would-be litigants may target you if they spoke with you, even if you were clearly not retained. Our advice to lawyers is to develop a standard practice of advising prospective clients of limitations that might apply to prevent recovery, and confirm that you do not consider yourself retained in the matter. If you withdraw from an ongoing legal matter, include a clear warning. If the matter is concluded, advise in writing of any future limitations that must be met to preserve or protect the client’s position. In light of the new Act, it’s even more important to protect yourself with this advice. Confirming the advice in writing is best but, at a minimum, keep notes. Sample non-engagement letters are available in the Practice Support and Resourcessection of the Law Society’s website.

The purpose of these tips and those in Beat the clock is to keep you from missing a limitation because of the new Act, or for any other reason. But if you do, report to us. Not only are you required to immediately report a claim or any other circumstance that could reasonably be expected to result in a claim, but early reporting may give us the chance to fix the problem.

This summary is based on Ten tips to beat the reset clock, Insurance Issues, Summer 2013.

Limitations and Deadlines Quick Reference List

A lawyer who missed the 10-day appeal period under the Bankruptcy and Insolvency Act (believing she had 30 days) suggested posting really short deadlines on the Law Society website, so that lawyers can quickly find the ones that may be early or obscure. The Lawyers Insurance Fund took that suggestion to heart when we created a quick list of the limitations and deadlines that you might face in a general practice. First published in 2007 with Beat the clock, the List was updated to June 1, 2014 to reflect the new Limitation Act and other changes, and a hard copy mailed to every lawyer in private practice. It is updated from time to time, and you can download a copy here.

Year after year, lawyers from every area of practice – big firms and small firms, senior lawyers and new calls – fall into the same traps. In fact, one in every four reports of claims and potential claims to LIF is triggered by a missed limitation or deadline.

The good news is that you can prevent missed deadlines by adopting the simple practices and procedures laid out in our award winning publication Beat the clock: Timely Lessons from 1600 Lawyers (2007). The first such guide published in North America, it offers more than 70 tips to prevent missed deadlines, along with real-life stories behind the mistakes. The content provides both practical guidance and high quality analysis of complete legal processes and procedures.

'Beat the clock' was mailed out to all lawyers in private practice in 2007. After reading the guide, nearly 90 per cent of lawyers surveyed in a membership survey had either already made changes to their practice or planned to in the future.

Survey respondents ranked the guide an average of 4.5 on scale of one to five, with five at the high end. Comments included:

Fantastic, relevant and worthwhile publication.

The guide is excellent and practical. It has enhanced my understanding of various issues and pitfalls.

I have incorporated every suggestion made in this excellent booklet into my practice.

I thought the publication was excellent, both in terms of the information contained and in the way in which it was laid out. It was user friendly. Now we just have to get everyone to read it!

Survey results show that the guide is being used by lawyers across different practice areas, including sole practitioners, small firm and large firm lawyers, as well as their articled students and legal assistants. “We are now looking at using the guide as one element of our orientation and continuing education program for incoming associates,” said one lawyer. “My assistant now has the guide taped to her desk,” another lawyer noted.

The changes already implemented or planned by survey respondents incorporate a variety of the risk management tips outlined in the guide for avoiding the four underlying causes of missed limitations and deadlines: oversights, mismanagement of the specific legal issues, failures in engagement management and ineffective communication. Early results show the guide is working. For example, one lawyer noted: “Today my practice was affected (in a good way) by something I read in the publication. I recalled the importance of a notice to the municipality where the police caused an injury.”

The guide won both the 2008 International Association of Business Communicators of British Columbia’s Bronze Quill Award for Excellence in the category of Issues Management or Crisis Communication, and the 2009 Risk and Insurance Management Society’s Arthur Quern Quality Award.